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Political-Giving Feedback

Two groups roll out indexes that measure how forthcoming big companies are about their political contributions.

The issue of corporate political contributions has drawn a lot of attention since 2010, when the Supreme Court opened the way for secret political contributions by companies and unions. Shareholder groups are pressing businesses to disclose what they give and warning of the risks involved in making contributions, including damage to corporate reputations, extortion and waste of corporate assets. The response from companies has been mixed. Now two organizations have made an effort to assess how much corporations are revealing about such contributions. An index from Baruch College in New York rates S&P 100 companies on the extent of their disclosures and their policies regarding contributions.

The Baruch index shows 22% of S&P 100 companies disclose little or no information about political expenditures, with the companies that give the most disclosing less than others.

The Center for Political Accountability (CPA) put together another index of S&P 100 companies in conjunction with the Zicklin Center for Business Ethics at the Wharton School. That index shows that one-third have some limits on corporate political spending, and almost one in four are not contributing directly to political campaigns. Fifty-seven of the companies disclose direct corporate political spending and have adopted board oversight, the CPA says.

“These findings offer hope for increasing corporate political transparency and accountability at a time of exploding hidden spending to influence elections,” says CPA president Bruce Freed. He notes, though, that no one knows how much corporations are giving to third-party advocacy groups set up as non-profits, which do not have to reveal the identity of their contributors.

In another sign that transparency may be on the rise, one of the developers of the Baruch Index, Naomi Gardberg, says companies are coming to Baruch for help in drafting procedures to regulate political spending.

Some critics say corporations should stick to providing products and services and not make any political contributions. But William Minor, a Washington-based partner at the law firm DLA Piper, says being active in politics is good business for many companies, and all sides should have their say on issues.

Will shareholders get any say on this topic? Institutional Shareholder Services, which follows investor efforts to pry information out of corporations, says shareholder proposals asking boards to provide more information on policy giving received average support of 32.5% in 2011, up from 30.4% in 2010. ISS says it’s too early to determine how many resolutions on this topic will be put forward in 2012.

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